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Georgina Lee

Deb Price

Good day, traders —
Catch up below on the top action in the Hong Kong and mainland markets.
We'd love to hear from you. Please send your feedback to deb.price@scmp.com
— Georgina Lee and Deb Price in Hong Kong
 


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Stocks

Stocks Blog: Property stocks hammered in Hong Kong on protest worries

Police fire teargas at anti-extradition bill protesters as they march towards the Liaison Office of the Central People's Government in Sai Ying Pun on Sunday. Photo: Sam Tsang

The Hong Kong Stock Exchange flag, China flag and Hong Kong flag are seen outside of the Hong Kong Stock Exchange in Central. Photo: Dickson Lee


Business

Markets

Property stocks pushing down Hang Seng as protests bite
AmCham urges Hong Kong government to 'stem any further damage' from protests to city's reputation
STAR tech board companies begin second week with curbs of 20 per cent up or down


AmCham urges Hong Kong government to 'stem any further damage' from protests to city's reputation.


China stock market

Hong Kong stock exchange

Live

Here's what we are watching this morning:
US Friday markets/ What futures foretell
--The S&P 500 rose 0.74 per  cent, the Nasdaq rose 1.11  and the Dow Jones Industrial Average inched up 0.19 per cent.
-- Hong Kong futures are down 0.12 per cent, while the China A50 futures are also down 0.23 per cent. 
IPO debuts: 
-- Jingjin Environmental Protection (603279 CH) 
Economic statistics/Central Bank action: Nothing major scheduled
Corporate events: earnings, meetings, news conferences:
None to note.
Good reads: Twenty companies face possible expulsion from the Hong Kong stock exchange if they miss a deadline on Wednesday to convince regulators their shares should be allowed to resume trading, Enoch Yiu reports. Daniel Ren and Zhang Shidong look at the wild week on Shanghai's new STAR tech board and what is likely ahead. 
 


Morning guidance 

Thing On Enterprise (2292 HK) said it expects to record a loss for the six months ended June 2019 of about HK$64 million, from a net profit of HK$82.2 million in the same period last year, according to a stock exchange filing.
The investment holding company that provides office, retail and industrial leasing attributed the expected decline mainly to a loss of investment properties’ fair value, at about HK$76 million. 
Thing On Enterprise last trading price was quoted at HK$1.19 on July 24, after which the stock recorded no trading volume over the next two days.  
— Georgina Lee 
 


Thing On Enterprise warns of first half loss at HK$64 million 

Ji Yao Holding (300108 CH) said in an exchange announcement Sunday night that 30 million shares held by its chairman Sun Jun had been frozen by the Guangdong province people’s court of Shenzhen municipality. 
That represented 23.6 per cent of his 127.4 million shares. Sun holds a 19.13 per cent stake in the ChiNext-listed company. 
The court froze some of his shares due to certain contractual disputes, which the company did not elaborate on in the exchange announcement.They represent about 4.5 per cent of the firm’s share capital. It said however as much as 99.6 per cent of his shares had been pledged to third parties. 
“As Sun is not the biggest shareholder of the company ... the portion of the frozen shares are not related with the company, and will not have impact on the company’s operations and management,” it said. 
Ji Yao  was last quoted at 6.53 yuan on Friday.
— Georgina Lee 
 


ChiNext pharma firm Ji Yao Holding says court freezes chairman’s shares

Industrial and Commercial Bank of China (ICBC) said in a Shanghai exchange filing on Sunday that its board has approved its wholly owned unit to buy a 10.8 per cent stake in Hong Kong–listed Bank of Jinzhou (0416 HK) for no more than 3 billion yuan.
The ICBC unit, ICBC Financial Asset Investment, was set up in 2017 for spearheading China’s debt-equity swap programme, which seeks to help troubled companies reduce leverage. 
The deal is not subject to shareholders’ approval. ICBC has already signed an agreement with the seller of the stake, which it did not name. The deal is still pending satisfaction of certain conditions, the Chinese banking giant said. 
ICBC (601398 CH) shares closed flat at 5.69 yuan last Friday, while shares of  Bank of Jinzhou (0416 HK) have been suspended since April 1, pending its 2018 annual results announcement.
The Liaoning province-headquartered bank said in May that EY had resigned as the bank’s auditor after EY noted certain problematic loans granted by the bank to some of its institutional customers, leading to market concerns on the bank’s liquidity health. 
— Georgina Lee 


ICBC’s unit to invest in 10.8 per cent stake in troubled Bank of Jinzhou

“AmCham urges the government to stem any further damage and show clear leadership in meeting the expectations of Hong Kong people and in restoring the city’s international reputation for effective governance under the ‘one country, two systems’ framework,” said Tara Joseph, the president of the American Chamber of Commerce in Hong Kong.  
 “A clear majority of our membership surveyed over the past week said the government needs to address the underlying causes of the protests and not simply to paper over the cracks of social instability with a short-term law-and-order fix,” Joseph said. 
AmCham surveyed its members and says it found businesses are already reporting serious consequences from weeks of mass demonstrations.
"These range from an immediate hit to revenue caused by disruption to supply chains and consumption, to longer term doubts over cancelled events and shelved investments. Respondents also reported a deepening perception within their companies and among overseas customers that Hong Kong has become less safe and a riskier place in which to conduct business," AmCham said in a news release.
 "While members made clear Hong Kong’s many unique competitive advantages remain largely intact, they voiced concern that a failure to address the instability and worsening perceptions toward the city now may lead to irreparable damage over the long term. The primary beneficiary of Hong Kong’s decline will be Singapore, the survey found."
As the protests continue, the government is looking at using anti-riot vehicles armed with water cannons and possibly liquid dye to be able to identify protesters. 
— Deb Price
 
 


AmCham urges Hong Kong government to 'stem any further  damage' from protests to city's reputation

Shares of Dynasty Fine Wines Group (828 HK) fell 50 per cent to trade at 71 HK cents this morning as it resumed trading after being suspended for more than six years.
It last traded at HK$1.44 before its suspension on March 22, 2013.
The company was approved by the stock exchange to resume trading after it conducted an internal investigation and introduced measures to strengthen its management.
The wine company and wireless solutions company Coolpad Group (2369 HK) resumed trading ahead of a Wednesday deadline that threatened to delist them.
To get rid of zombie companies on the stock board that hadn't traded for long periods, the stock board last August gave any who had been suspended at that point by at least a year to have one more year to prove they should be allowed to trade.
Now 20 firms face the Wednesday deadline to resume trading or see themselves delisted.
Coolpad resumed trading on July 19 after its shares had were dormant for two years.
Read full story here about the rule change.
— Enoch Yiu
 


Dynasty Fine Wines plummets 50 per cent as it resumes trading after six-year suspension

The Hang Seng Index is trading down 0.77 per cent to 28,179.26, weighed down by Hong Kong property stocks.
Leading the Hang Seng lower were selective Hong Kong property stocks, with Sun Hung Kai Properties (16 HK) down 1.6 per cent at HK$126 and New World Development (17 HK) down 1.4 per cent at HK$1.52.
The city’s monopoly train operator MTR (66 HK), whose property development business contributed some 20 per cent of its profit last year, was down 1.5 per cent at HK$53. Link REIT (823 HK) was down 0.7 per cent at HK$94.30.
Financials also dropped. Insurer AIA (1299 HK) was the biggest decliner on the Hang Seng, down 1.4 per cent at HK$83.95; HSBC (5 HK) was down 0.3 per cent at HK$64.50.
The CSI 300, which tracks blue chips trading on Shenzhen and Shanghai board, was down 0.1 per cent at 3,854.76. The Shenzhen Component Index was up 0.2 per cent, at 9,369.28.
The Shanghai Composite Index was down 0.04 per cent at 2943.26.
Selective brokerages declined, with Huatai Securities (601688 CH) down 4.11 per cent at 20.53 yuan, Citic Securities  (600030) down 1.2 per cent at 23.11 yuan, and Hongta Securities (601236 CH) down 1.4 per cent at 13.7 yuan.
— Georgina Lee 


Hang Seng falls, while Chinese markets mixed in early trading

Beijing Worldia Diamond (688028 CH) hit the daily 20-per cent up limit that it and last week's other debut stocks on the new STAR tech board will operate under going forward.
When stocks go public on the Shanghai board, they are allowed to trade without limit the first week. 
The high-precision diamond cutting tools manufacturer ran up to 88.68 yuan, with a total of 404.1 million yuan worth of shares changing hands. 
In morning trading, all 25 stocks on STAR  board are trading higher, with Traffic Control Technology (688015 CH) up 16.8 per cent at 55.55 yuan as the second biggest percentage gainer, with 389.6 million yuan of turnover.
Here' you can learn about the STAR board's first wild week. 
Here's a look at how China threatens to disrupt the world's diamond industry, with cheap fakes that it is making better and better on know-how from its dominance in making high-precision diamond tools.
— Georgina Lee


Beijing Worldia Diamond hits 20 per cent STAR tech board’s up-limit

Investors have been waiting for this week.
Finally, after weeks of hints by officials and endless market speculation, investors will learn whether the US Federal Reserve will cut its benchmark rate by a quarter of a percentage point, as expected.
If it does that, Hong Kong-listed bank stocks could get a temporary lift, while weaker property stocks, especially those ones whose focus isn’t residential, could be weighed down, experts say.
Those sectors with big debt, like airlines, could see their shares rise. Gold-linked stocks could go up, as investors see the yellow metal as a more attractive asset in a lower-rate environment.
Meanwhile, Hong Kong’s Hang Seng Index could get a sugar rush – it’d be the first rate cut in the US since 2008 – especially if the Fed surprises with a bigger cut. That could break the benchmark’s tight range-bound trading for more than a month on thin turnover, partly due to investors waiting on the sidelines for the Fed to act.
Such a bigger-than-expected surprise rate cut could push the Hang Seng benchmark up to 29,000, where it has not been since May, when trade talks broke down and sent benchmarks around the globe tumbling, said Alvin Cheung, associate director at Prudential Brokerage.
Read full story by Georgina Lee here. 


US Fed rate cut could boost Hong Kong-listed banks, experts say

H shares of Chinese banking giant Industrial and Commercial Bank of China (1398 HK) have sunk 2.5 per cent to HK$5.38 after it announced that its wholly-owned unit, ICBC Financial Asset Investment, will invest up to 3 billion yuan for a 10.82 per cent stake in the troubled Bank of Jinzhou (416 HK).
That's the lowest its shares have traded since November 14, 2018 when it was at HK$5.36; and in Shanghai, the loss in the A share issuer was slimmer, at 0.7 per cent at 5.65 yuan.
In a Hong Kong exchange filing, the Liaoning-headquartered bank disclosed that two of China’s four largest distressed debt managers, China Cinda Asset Management and China Great Wall Asset Management, will join ICBC in taking a stake in the bank. It said it was selling another 6.49 per cent to Cinda Investment, although it did not say how much China Great Wall has agreed to buy.
The deal is not subject to ICBC shareholders’ approval.
“The investment is to serve country’s supply-side reform in the financial sector and enhance the bank’s capability to serve the real economy,” the ICBC said in its statement, Reuters reported, adding the deal will be conducted with the unit’s own funds.
Bank of Jinzhou, which has remained suspended since early April, had said in May that EY had resigned after the auditor noted certain problematic loans granted by the bank to some of its institutional customers, leading to market concerns on the bank’s liquidity health.
— Georgina Lee 


ICBC H shares sink after it announces investment in troubled Bank of Jinzhou

Country Gardens  Services Holdings (6098 HK) says it expects its first-half net profit will increase by more than 50 per cent compared to the same period a year earlier.
 "Such increase was mainly attributable to the increase in area of properties under the Group’s management, as well as the comprehensive growth in revenue from community value-added services and value-added services to non-property owners, which together brought about an increase in consolidated net profit," it said in a new exchange filing.
It was last trading up 0.74 per cent at HK$19, having fallen from an intra-day high of HK$19.92.
The China-based company provides property management services.
— Deb Price 
 


Country Gardens Services Holdings says 1H net profit to increase by more than 50 per cent 

The properties sub-index in Hong Kong was down 2.25 per cent at 41,063.9, performing worse than the broader Hang Seng Index, which was down 1.15 per cent at 28,068.91.
A weekend apartment sale by Sun Hung Kai Properties flopped in Kam Tin, a district 3 kilometres from Yuen Long where the police clashed with protesters.
Nearly two months of demonstrations are impacting Hong Kong’s real estate, as well as other sectors.
Sun Hung Kai sold only seven of 145 units of its Park Yoho Napoli project in Kam Tin, after tens of thousands of protesters marched Saturday in protest against a July 21 mob attack on commuters. Police fired tear gas to disperse them. Sun Hung Kai (16 HK) was down 1.2 per cent at HK$126.5.
But better weekend sale did not stop Great Eagle (41 HK) shares from declining. It was down 2.3 per cent at HK$32.55. The developer sold all of the 238 flats offered in the first batch of its Ontolo project, in a district called Pak Shek Kok, which is in the eastern part of the New Territories.
MTR (66 HK), the city’s only rail operator which got a fifth of its profit from property development last year, led the blue chips decline, falling 4.1 per cent to HK$51.6.
Wharf Real Estate Investment (1997 HK) was down 3.6 per cent to HK$48.95, while Link REIT (823 HK) was down 3.4 per cent at HK$91.80.
Given the heightened social unrest in recent months, analysts said they prefer property stocks with less commercial property exposure as weak retail sales could weigh on rental income.
Here's a look at how the expected US Fed rate cut this week may affect Hong Kong property and other stocks.
— Georgina Lee


Property stocks pushing down Hang Seng as protests bite

Poultry-farming stocks rose in China, as chicken and egg prices have shot up.
A gauge tracking 10 of poultry-farming stocks shows that seven of them rose in morning trading.
That bucks a decline in the CSI 300 index of large cap stocks in Shanghai and Shenzhen. it was down 0.1 per cent at 3,853.8.
The wholesale price of eggs has risen 16.7 per cent over the course of July, and has surged 44 per cent from the low point seen in March. They were priced at 9.77 yuan per kilogram last Friday, according to latest figures from the Ministry of Agriculture and Rural Affairs.
The wholesale price of chicken also rose to 20.11 yuan per kilogram, up 11 per cent from a year ago, according to the China Good Agri-products Development and Service Association.
Jiangsu Linhua Animal Husbandry (300761 CH) was up 6.4 per cent to 60.03 yuan. Shandong Minhe Animal Husbandry (002234 CH) rose 6.1 per cent to 35.59 yuan. Shandong Xiantan (002746 CH) was up almost 3 per cent at 17.11 yuan. Shandong Yisheng Livestock & Poultry Breeding (002458 CH) rose 2.7 per cent at 26.78 yuan.
 
— Georgina Lee


Poultry-farming stocks rise in China as chicken and egg prices soar

Shanghai-listed brokerage Huatai Securities said in an exchange announcement that some 1.09 billion of its shares will be released after their lock-up period expires on August 2.
The 12-month lock-up period was applied to six of its shareholders, which include a subsidiary of the Alibaba Group, Essence Securities and others. The expired locked-up shares account for 12 per cent of the company’s total outstanding share capital, it said.
The stock was the top third–most traded stocks in turnover, as 1.39 billion yuan worth of the stock changed hands. Huatai Securities (601688 CH) was down 4.2 per cent at 20.51 yuan by lunch break.
— Georgina Lee


Huatai Securities tumbles ahead of lock-up period ending for 1 billion-plus shares

Investors are getting worried about the protests. And it's weighing on the Hang Seng today, says Kenny Tang Sing-hing, chief executive at Royston Securities.
A 3 pm news conference on the protests will be held by Beijing's top body in Hong Kong affairs. Institutional buyers — many of whom are on summer holiday — aren't buying enough to make up the difference in selling by worried retail investors, he said.
"The market is waiting ... to see whether there is any announcement from mainland China," he said.Investors are also growing less hopeful of a 50-basis point cut in the US Federal Reserve rate rather than a smaller one, and have been selling, further dragging down Hong Kong's market, Tang said.
"For Link Reit (0823 HK) ... there is some profit taking, as the market is worried about retail being affected by the protests," Tang said.Property companies have been leading the losses on the Hang Seng this morning, with Link Reit down 3.5 per cent and Wharf Real Estate Investment (01997 HK) down 4 per cent.
A rate cut is often seen as beneficial to the property market as lower rates make it cheaper to buy or invest in properties. But some experts are not expecting the city's banks to lower their rates.
Other victims of today's profit-taking pressure are the casino stocks, as they "have already rebounded for more than one month", Tang said.
Sands China (01928HK) and Galaxy Entertainment (0027HK) have dropped 2 and 1 per cent respectively.
On the news conference, Tang said the likely outcome should not come as a surprise to the market.
"The [Chinese] central government will reiterate their support for the Hong Kong government," he said.The worst case scenario for the market would be if Beijing decides to activate the People's Liberation Army to quell protests."But I don't think that will happen," Tang added.
— Daryl Choo 


Protests weighing on Hang Seng

Shares of Jingjin Environmental Protection (603279 CH), which makes industrial machinery, jumped by their 44 per cent daily limit to 19.53 yuan when they traded for the first time in Shanghai, forcing the exchange to suspend their transactions.
A mere 27,259 shares changed hands in the Shandong-based company, which offered its stock at 13.56 yuan in an initial public offering.
— Eugene Tang
 


Jingjin Environmental Protection shares jump by 44 per cent daily limit in debut

Shenzhou International Group (2313 HK) rose 1 per cent to HK$111.40 as it announced an agreement in which the Ningbo Beilun district government will provide support for 18 projects related to the garment manufacturing industry that it is pursuing.
The maximum investment amount for these projects is estimated to be about 7.2 billion yuan this year and in 2020, and the company may get other investors to co-invest.
These projects include expansion and update of new fabrics and garments’ production capacity, construction of warehouses, staff dormitories and office buildings, and environmental protection projects such as sewage and solid waste treatment.
The district government will also support through facilitating land purchase, construction approval processes and other policy supports.
— Georgina Lee


Shenzhou International bucks Hang Seng Index downward trend

Southern Energy (1573 HK) fell to a 13-month low after claims by short-seller Emerson Analytics that it inflated its revenue by five times.
Shares of the hard coal producer in Guizhou Province dropped 2.2 per cent to HK$9.73. The company’s corporate relations firm in Hong Kong said the company was not immediately available for comment.
Emerson Analytics claimed that Southern Energy's revenue for 2016 and 2017 should be just 12 per cent and 21 per cent of its reported revenues respectively.
For 2017, Southern Energy reported revenue at 642 million yuan. But by using information from the enterprise credibility information system maintained by the State Administration of Industry and Commerce, which keeps tabs on key financial data of Chinese business entities, the research firm said the revenue for that year should be just 134 million yuan, indicating an overstatement of almost five times.
“The beautiful picture painted by Southern Energy is a complete lie: its actual revenue is way below the disclosed numbers ...(S)ales to its so-called major clients are dubious, and the company has been loss-making most of the time rather than profitable”, the report said.
It alleges that Southern Energy was actually loss-making for each of the three years from 2016 through 2018, with aggregate net losses of 21 million yuan, rather than its reported 650 million yuan in net profit for those years.
Southern Energy is on track to record a fifth straight day of losses and its biggest decline since June 2018.
— Georgina Lee


Southern Energy falls to 13-month low after short seller's attack

The SCMP has a live blog on the news conference of the Hong Kong and Macau Affairs Office, whose officials are speaking now about the ongoing demonstrations in the city.
Worries about the protests are cited as one reason the Hang Seng Index is trading down today. Business leaders have also expressed concern about the impact.
You can read the blog here.
 
 


Beijing's top policy body on city answering reporters' questions: SCMP live coverage 

Chinese tech giant Tencent Holdings should see its games growth recover in the second quarter thanks to multiple new titles being released since the resumption of license approvals, but advertising revenue growth will be sluggish due to intense competition, according to a report from Goldman Sachs.
The investment bank maintains a “Buy” rating on the stock and expects mobile gaming revenue growth to recover to 23 per cent year on year in the second quarter. In the first quarter, Tencent reported a 2 per cent year on year decline in mobile games revenue to 21.2 billion yuan (US$3 billion) due to fewer new titles being released in the period.
The newly released game Peacekeeper Elite has maintained healthy user growth since its debut in early May, according to iResearch. On June 20, Tencent announced that the number of daily active users of Peacekeeper Elite had exceeded 50 million in less than two months since its launch.
“We believe the strategic focus for the game at the current stage is still enhancing user experiences and maintaining the retention rate, with less ﬁnancial impact in the near term due to deferred revenue recognition,” Goldman Sachs’ Piyush Mubayi said in the report.
Growth in China’s gaming industry stalled last year amid a regulatory crackdown on internet content and efforts to stem gaming addiction, with Chinese authorities suspending the licensing process for new games for nine months, restarting it in December.
Goldman Sachs put a target price of HK$418 on Tencent, which was ahead 0.38 per cent to HK$371.60 in late afternoon trading. 
Read full story by Celia Chen here. 


Tencent gains as Goldman Sachs maintains 'buy' rating 

The Hang Seng got back some of its earlier losses as officials at Beijing's top policy office in Hong Kong addressed the protests that have gripped the city.
At 3:01, when the press conference was getting under way, the index was trading at 27,983.76, then dipped to 27,971.15 at 3:05.
Then, as the news conference continued, the index rose to 28,126.71  at 3:19. Now it's back down to a 1 per cent loss at 28,099.32.
Yang Gang said as the index was rising, "The rule of law is what Hongkongers are proud of. Violence is violence; unlawful acts are unlawful. It doesn't change, no matter what the target is. The central government supports the relevant government departments and police to protect the rule of law.”
Shortly before that, he said, "The government has to "find ways to push for economic development and solve grievances of youngsters on quality of life and career prospects".
— Deb Price
 


Hang Seng recovers some of its losses as Beijing official speaks on protests

Shares of retail-related commercial property landlords appear to be the most threatened by the almost two months of protests, said Alex Wong, a director at Ample Finance Group. Already, there are signs that the city’s retail sales and tourism have been affected by the social unrest.
“At this point the impact really is up to anyone’s interpretation. For someone who is more pessimistic and believes that the current turmoil will drag on for months, then I’d say there could be a 10-15 per cent downside in share price in some of the leading Hong Kong property developers,” he said.
That decline would reflect the potential loss of earnings caused by the protests if they drag on beyond the summer.
Wong said in the recent weeks he has seen a lot of money switching out of purely Hong Kong stocks and into those that have substantial China-based business. But that could also be good news for the Hang Seng Index, as China-related stocks listed in Hong Kong could provide support to the blue chip index as the city goes through stressful times economically.
Wong sees upside for the Hang Seng index at 28,200-28,400, and downside support this week at 27600-27,700.
The Hang Seng Index is down 0.97 per cent to 28,121.32. 
— Georgina Lee 


Shares of retail-related commercial property landlords appear most at risk by protests, says Alex Wong of Ample Finance 

The CSI 300, which tracks blue chips listed on Shenzhen and Shanghai exchanges, slipped 0.1 per cent to 3854.27, while the Shanghai Composite Index was down by the same to 2941.01.
Leading the index lower in Shanghai was the Industrial and Commercial Bank of China (601398 CH), down 0.7 per cent at 5.65 yuan. It said on Sunday that its wholly-owned unit, ICBC Financial Asset Investment, will invest up to 3 billion yuan for a 10.82 per cent stake in the troubled Bank of Jinzhou (416 HK), whose shares are suspended.
China Merchant Bank (600036 CH) fell 1.1 per cent to 36.83 yuan, while China Life Insurance (601628 CH) lost 1.2 per cent to 29.93 yuan.
Huatai Securities (601688 CH) dropped 4.7 per cent, to 20.4 yuan after the brokerage said some 1.09 billion of its shares would be released after their lock-up period expires on August 2. The locked-up shares accounts for 12 per cent of the company’s total outstanding share capital, it said. It saw the third biggest stock turnover, with a total of 2.1 billion yuan worth of its shares traded.
The Shenzhen Component Index edged up by less than 0.1 per cent to 9,354.28.
For the STAR tech board, the exchange today began implementing a 20 per cent up and down daily limit. The 25 stocks on the board — now one week old — rose. Diamond cutting tool maker Beijing Worldia Diamond (688028 CH) was the only stock that hit the daily 20 per cent up limit, closing at 88.68 yuan.
— Georgina Lee 


Banks, brokerages weigh on China markets

The Hang Seng closed down 1 per cent, narrowing earlier losses of almost 1.6 per cent as a news conference by Chinese officials on the protest crisis appeared to reassure investors.
Yang Guang, a spokesman for the Hong Kong and Macau Affairs Office under the State Council, affirmed the central government’s support for the Hong Kong government and the police to protect the rule of law.
The drop in the Hang Seng followed a weekend of protests in Yuen Long and in Sheung Wan, in which tens of thousands of protesters clashed with the police.
The public unrest is being felt in Hong Kong’s real estate market. Dampened by poor weekend property sales, Sun Hung Kai (16 HK) was down 0.6 per cent to HK$127.20.
The sell-off in property was broad.
Link REIT (823 HK) was down 2.8 per cent to HK$92.35, and CK Asset (1113 HK) dropped 2.6 per cent to HK$61.10.
Financials also suffered, as insurer AIA (1299 HK) dropped 1.9 per cent to HK$82.60 as the biggest index point decliner.
ICBC (1398 HK) lost 2.4 per cent to HK$5.39. That was its lowest share price since November 14, 2018. The group said in a Shanghai exchange announcement Sunday that its wholly-owned unit, ICBC Financial Asset Investment, will invest up to 3 billion yuan for a 10.82 per cent stake in the troubled Bank of Jinzhou.
Shenzhou International (2313 HK) bucked the decline of the Hang Seng Index and rose 1.2 per cent at HK$111.7. That helped cap losses in Hang Seng China Enterprise Index, which closed down 0.7 per cent at 10,780.59.
Alex Wong, a director at Ample Finance Group, said he sees upside for the Hang Seng index at 28,200-28,400, and downside support this week at 27,600-27,700.
— Georgina Lee 


Investors appear to have found Chinese officials' message on protests reassuring, cutting some of Hang Seng's losses

Chinese investors — sitting on cash earned from the new STAR tech board last week that saw one stock shoot up more than 500 per cent — are waiting to see signals out of Tuesday's trade talks in Shanghai for their next moves, says Louis Tse Ming-kwong, managing director of VC Asset Management. 
"On the first day of trading on the [STAR] tech board last week, money was withdrawn from A-shares and the Shanghai Composite index for speculating (on tech board stocks) .... "(But) after ... heavy punting on the [STAR] tech board, the gains fizzled out, when price-to-earning multiples of these STAR stocks reached 50-60 times. (Such valuations) simply cannot be sustained.  It's out of this world." he said.
Now investors who have pulled out from the STAR board when prices skyrocketing are now sitting on their capital, waiting for the right time to buy into the main boards.
"They want to come back ... but they want to see what happens in the US-China trade talks tomorrow," said Tse.
— Daryl Choo


Profit takers from STAR high fliers now looking to Tuesday's trade talks, says Louis Tse of VC Asset

Beijing's response to the escalating political crisis in Hong Kong, despite lacking insight into the central government's plans to quell protests, should be "a bit of an encouragement" for the Hang Seng, said Louis Tse Ming-kwong.
The managing director of VC asset management added: "In terms of market sentiment, we didn't expect much from the Hong Kong and Macau Affairs Office to make any big announcements ... It served a specific purpose, to try to calm everybody down."
The conference, he said, should act as a "stabiliser" for the Hang Seng, which dropped below the 28,000 level at one point in the afternoon. It closed down 1 per cent at 28,106 points.
In the 45-minute press conference, two Chinese officials didn't directly address whether the People's Liberation Army will be mobilised to maintain peace and order Hong Kong.
When asked, Yang referred reporters to the Garrison Law and the Basic Law, Hong Kong's de facto constitution, but did not elaborate.
"It was form over substance, not substance over form," said Tse, adding that the meeting was "more of a formality" for the central government to reaffirm support for Carrie Lam and her government.
Instead, Tse said investors are watching interim results of the "big boys" like Hong Kong banks and Tencent (0700HK), as well as confirmation of a US Federal Reserve rate cut this week and developments on the US-China trade talks.
Chinese and American negotiators will meet in Shanghai on Tuesday and Wednesday for the first face-to-face meeting since talks collapsed in early May, while the Fed's rate-setting committee will release its policy statement on Wednesday at 2pm Eastern Time.
— Daryl Choo


Beijing's conference on protests should provide some support for Hang Seng, says Louis Tse

China Life (2828 HK) issued a profit alert after the market closed on Monday. The largest life insurance company of the nation expects its first half year net profit will increased by a range of 115 per cent and 135 per cent than a year earlier, or increased by 18.88 billion yuan to 22.17 billion yuan, the company said in a stock exchange filing.
Its net profit stood at 16.43 billion yuan in the first half of last year. China Life is expected to report a net profit for its first half year at a range between 18.88 billion yuan to 38.6 billion yuan.
The insurer said the profit increase was due to strong stock investment return of its investment portfolio as well as a change of income tax policies that has cut down its tax payment.
— Enoch Yiu


China Life expects big 1H net profit increase, its says after market close 

Life sciences research services provider and cancer treatment developer Genscript Biotech (1548 HK) closed up nearly 12 per cent after saying its cooperation with US drugs development giant Janssen Biotech to run clinical trials for Genscript's chimeric antigen receptor T-cell (CAR-T) therapy for multiple myeloma — a blood cancer — has achieved the second and third milestones.
This means Genscript is entitled to be paid US$30 million and US$25 million by Janssen — a unit of US healthcare giant Johnson & Johnson — for the respective achievements.  
It is an incurable form of cancer that causes the build-up of abnormal plasma cells in bone marrow. Some 74 patients were enrolled in a trial in eastern China, in which favourable results were seen in 17 patients by October last year, Genscript said in April this year. Jassen early last year paid Genscript US$350 million to fund the therapy's development and share potential revenues if it is approved for marketing.
— Eric Ng 
